SHAHID MAHMOOD BHATTI, MEMBER (JUDICIAL).---This judgment shall dispose of two (02) Customs Appeal No.312/LB of 2011 (filed by the appellant) and No.12/LB/2012 (filed by clearing agent ) filed against an Order-in-Appeals Nos.525 and 526 of 2011 dated 10-11-2011 passed by the learned Collector of Customs (Appeals), Lahore.
2. The, brief facts giving rise to this appeal are that Messrs Yasir Enterprises, Multan imported a consignment declaring goods as residue of petroleum. The said consignment was consisting of 25 containers containing 3400 drums weighing 527 M-Tons imported from Jeddah (KSA) vide Bill of Lading No. 502852 dated 10-3-2009 and Commercial Invoice. No. BCE-YE008-09 dated 10-3-2009.
The Goods Declaration No.MDRY-11C-1151 dated 30-3-2009 was filed by Mr. Shahid Mehmood, Work Permit Holder on behalf of Messrs Pioneer Customs Clearing and Forwarding Agent, Multan seeking clearance of the goods. The assessment was claimed under PCT heading 2713.9090 and the value was declared at USD 0.120/kg and duties/taxes amounting to Rs.17,29,865, were deposited with National Bank of Pakistan, Dry Port Trust Branch, Shershah Multan. The GD was filed under 2nd appraisement system. The aforesaid amount was deposited through pay Order No. 0964196 on 30- 3-2009 issued by MCB, Vehari Chowk, Multan from Account No.3000-2 pertaining to Bashir Ahmad son of Muhammad Sardar. As per Cargo summary of MDPT bearing No.1305 dated 30-3-2009, the first batch of part consignment of 14 containers, only 08 containers arrived at MDPT while 06 containers reached on 31-3-2009. A perusal of the Import Folio. No. MDP/Imp/359/09 of the said GD showed that Mr. Abdul Rauf, Examining Officer, examined the said consignment on 30-3-2009 and therein endorsed the examination of all the 14 containers instead of 08 containers and drew representative samples for Lab Test, but he failed to point out actual description, apparent difference of colour, viscosity and colour of the said goods for the reasons best known to him and recorded examination report without making any reference to his senior Officers. Rana Ali Hassan, Deputy Superintendent without confirming the facts and evidential circumstances of the examination report, countersigned the same. It is further reported that perusal of the aforesaid record revealed that Rana Nisar Ahmad, AO appraised the said consignment consisting of 25 containers on the basis of 2nd appraisement system under section 80 of the Customs Act, 1969 on 30-3-2009. The said appraisement was duly approved by Mr. Azdar Durrani, Principal Appraiser.
However neither the Appraising Officer obtained prior permission from the higher Officers nor any request of the importer or his authorized Clearing Agent was available on file which confirmed that the Appraiser failed to discharge his duty appropriately as required under Para-3 of Chapter-II (Scrutiny and Assessm ent) of the Appraiser Manual. The part consignment of 14 containers comprising of 1904 drums weighing 295.120 M-Tons was out of charged by Mr. Altaf Khan, Superintendent on the same day i.e, 30-3-2009 after payment of duty and taxes. Out of short landed consignment consisting of 11 containers, 03 containers reached on 1-4-2009, which were examined again by the same Examining Officer. As per examination report, samples were drawn for Lab Test. The remaining 08 containers arrived on 2-4-2009 and said short landed consignment was jointly examined by the Customs Staff of Multan Dry Port and Intelligence & Investigation-FBR, Range Office, Multan on 1-4-2009 and 3-4-2009. During the joint examination, it was observed that there were 1531 drums in 11 containers as against the declaration by the importer of 1496 drums (136 drums per container). In this way, the importer has also mis-declared the quantity of the drums as 1496 instead of 1531 and tried to get clear restricted item. Principal Appraiser, Dry Port Multan after joint examination and drawal of the representative samples, again sealed the containers.
Meanwhile, a sample drawn from the consignment already cleared sent to Hydrocarbon Development Institute of Pakistan (Petroleum Test Center) Lahore (HDIP) for chemical analysis as HDIP Multan shown its inability to carry out test of POL samples. HDIP Lahore vide test Report No.15344 dated 3-4-2009 reported that test result of the sample is comparable to HSD, but contains water and sediment not suitable for use in diesel engine. On receipt of said report, Principal Appraiser seized the short landed consignment comprising of 11 containers consisting of 1531 drums containing 251084 Kgs of HSD falling under PCT heading 2710.1931 under Section 168 (1) of the Customs Act, 1969. Apart from this, the part consignment of 14 containers consisting of 1904 drums containing 295.120 M-Tons HSD cleared on 30-3-2009 was also seized under section 168 of the Customs Act, 1969 with the charge of misdeclaration of description of goods by serving a notice under section 171 of the Customs Act, 1969 and the importer was directed not to remove, part with or otherwise deal with already cleared consignment except with the prior permission of the authorized Customs Officer of MCC Multan. Principal Appraiser also formulated AIR No.09/2009 dated 3-4-2009 with the request for initiating criminal proceedings against the culprits involved in the said fraudulent import and accordingly an F.I.R. No.1 of 2009 dated 3-4-2009 was registered with Investigation and Prosecution Branch, Customs House, Multan. Samples drawn during joint examination were also sent to HEJ (Research Institute of Chemistry) Karachi for chemical analysis. .HEJ vide Report No. IAC/09/04/2958 dated 25-4-2009 also confirmed that "in the light of test carried out, the given samples seem to be High Speed Diesel Oil". In response to request for re- confirmation of exact description of the aforesaid goods, the co-Principal Investigator of HEJ vide letter dated 16-5-2009 confirmed that "on re-analyze the provided samples for the exact specification; result shows both samples of petroleum liquid fulfillment of High Speed Diesel as per Pakistan Standard Specification of HSD. Thus, in the light of aforesaid test report, the seized consignment along with partly cleared consignment of 14 containers appropriately attracted PCT Heading 2710.1931 meant for HSD the import of which was restricted into Pakistan under Section 16 of the Customs Act, 1969 read with Serial-2 of Para-II, Appendix-B of Import Policy Order 2008-2009 liable to confiscation under section 168 of the Customs Act, 1969 as HSD was only importable by approved Oil Marketing Companies. Hence, a show cause notice dated 27-5-2009 was issued On the allegation that Messrs Yasir Enterprises Multan had imported HSD falling under PCT Heading 2710.1930 in the garb of residue petroleum with active connivance of Messrs Pioneer Customs Clearing and Forwarding Agent, Multan, Customs Officers/Officials and others and tried to clear the goods in question by depriving the Government Exchequer from its legitimate revenue amounting to Rs.1,38,83,740 on account of Customs Duties, Sales Tax, Petroleum Development Levy and Additional Sales Tax by violating the provisions of sections 2(s), 16, 18, 32(1) & (2), 32-A (1), 79, 80, 202-A of the Customs Act, 1969, sections 3, 34 and 36 of the Sales Tax Act, 1990 read with section 3(1) of Import and Export (Control) Act, 1950 punishable under clauses 8(1), 14, 14-A, 43 and 89 of Section 156(1) read with sections 157(1) and 178 of the Customs Act, 1969 further read with Section 3(3) of the Import and Export (Control) Act, 1950 and Serial-2 of Part - II, Appendix-B of the Import Policy Order, 2008-2009.
3. The show cause notice was replied by the appellants and as a consequence of adjudication proceedings, the learned adjudicating officer passed an Order-in-Original No.150 of 2010 dated 24- 1-2010 issued on 9-12-2010. Being aggrieved of the said order, the appellants filed an appeal before the learned Collector of Customs (Appeals), MCC, Lahore, but during the pendency of appeal before respondent No.3, the learned Collector of Customs, MCC, Lahore re-opened Order-inOriginal No. 150 of 2010 dated 24-1-2010 issued on 9-12-2010 in terms of section 195 of the Customs Act, 1969 on the grounds that it was passed by respondent No.2 beyond time limit as specified in section 179(3) of the Customs Act, 1969 with the directions to re-adjudicate the case within six weeks vide order dated 27-1-2011. On reopening the aforesaid order, the appeal filed by appellants was also disposed of by respondent No.3 as having become redundant vide Order in-Appeal No.91 of 2011 dated 28-3-2011. The learned adjudicating officer in pursuance of order dated 27-1-2011 passed by the learned Collector of Customs, Lahore re-adjudicated the matter, which culminated into passing of an impugned Order-in-Original No.43 of 2010 dated 4-4-2011 issued on 19-4-2011. Being aggrieved of the said order the appellants filed appeal before the learned Collector of Customs (Appeals), Lahore which was partly accepted so far as it relates to 14 containers, examined, assessed and cleared by the Customs authorities while the order-in-original in respect of rest of the consignment consisting of 11 containers was maintained vide impugned order-inappeal dated 10-11-2011.
4. The appellants have filed the instant appeal before this Tribunal on the following grounds:---
(a) That respondent No. 3 in Para-21 of the impugned order has admitted that re-opening of the earlier order by the Collector of Customs Lahore was bad in law but lost sight that if the original order was illegal how the subsequent order passed by respondent No.2 on the basis thereof would sustain. Para-21 of the impugned order reads as under:-
(21) I have examined the case and gone through the voluminous record of the case presented during hearing. The evidence available on record indicates that he appellants did get clearance of part of the goods on documents even before the goods had arrived and some of the examination report were also signed by the customs officials well before the arrival of the goods. This lone fact is an indicator .Of the fraud on the government exchequer. Some of the technicalities pointed out by the learned Advocate for appellant appear to have a lot of legal force. Of particular interest is the so called reopening of the Order-inOriginal No.150 of 2010 dated 9-12-2010 by the Collector MCC, Lahore on the ground that the same has been passed after the expiry of the statutory period. Such re-opening raises more questions than it answers in as much as it is highly questionable as to whether passing of an order after the limitation period is an illegally and improperly capable of being corrected through another orders. As this question is sub-judice before higher judicial fora, no findings on the issue can be given."
(b) That perusal of aforesaid version of respondent No.3 makes it crystal clear that entire case was based on mala fide. The earlier order re-opened just to over come the issue of limitation but the Collector of Customs Lahore also lost sight that by re-opening, the limitation would not be extended. It was an exercise in futility on his part. Rather he admitted that the earlier order passed by respondent No. 2 was a void order having been passed and issued after expiry of limitation prescribed under section 179(3) of the Customs Act, 1969.
(c) That respondent No.3 in Para-22 of the impugned order has stated that there were three laboratory reports in this case. He relied upon the report of HEJ Lab on the ground that it performed requisite tests. It is settled proposition of law that if there are more than one reports and majority of them containing identical opinion, such reports shall be accepted on the basis of majority views and not the single report. Para-22 of the impugned order reads as under:-
(22) There were three laboratory reports in this case. The departmental reliance on the report from HEJ laboratory that the impugned goods were HSD Oil is justified because other laboratories did not perform certain tests which the HEJ laboratory did, particularly with reference to the ratio of water etc. In the impugned goods. The report from the Lahore laboratory had lost its relevance in view of the later proven mala fide intentions of the relevant officials."
(d) That even otherwise the appropriate and notified Lab for testing of petroleum product was Hydrocarbon Development Institute of Pakistan (Petroleum Testing Center) and not HEJ. It is pointed out that hundreds of reports were obtained by the Multan Dry Port from the said institute.
The samples of petroleum products always sent and tested by the said Institute pertaining to all Ports in Pakistan. Thus, the view of respondent No.3 that the report of HEJ Lab was rightly relied upon is patently erroneous as is evident from the perusal of Para-20 of the impugned order which reads as under:-
(20) On behalf of the department Mr. Muhammad Ali Rizvi reiterated the stance as reflected in the impugned order and in the parawere comments of the department. He stressed that samples were drawn in the presence of the C/A of the appellants or subsequently in the presence of a representative of the appellants. He stated that the said representative had signed a document testifying his presence at least in one case. He did not controvert the appellant's position that as per normal practice, the department was continuing to accept the HDIP reports even after the instant case."
(e) That according to the report of Hydrocarbon Development Institute, the goods were reported to be HSD containing water and sediment not suitable for use in diesel engines, appropriately classifiable under HS Code under PCT heading 2710.9100 freely importable even by commercial importers as was mentioned in F.I.R. Lodged in this case.
(1) That respondent No.3 has also fallen in error of law and facts that the goods were sold at par with the prices obtained as a result of disposal of similar goods throughout the country. It is, pointed out that goods in this case were sold at Rs.26 per liter whereas identical goods were sold to government departments at the prices exceeding Rs.50 per liter by the same Collectorate. It is further submitted that at the relevant time, the value of HSD was more than Rs.60 per liter. Had the goods in question been HSD, the same would have not been sold at Rs.26 per liter. Since it was residue of petroleum, thus, the same was sold at Rs.26 per liter. This alone established that the goods in question were residue of petroleum and not HSD.
(g) That respondent No.3 also erred in law and facts by holding in Para 24 of the impugned order that even if the original order was barred by time, the recovery of duties and taxes could be affected but he lost sight that it was not the case of evasion of duties and taxes. It was,a case about dispute over the description of the goods and registration of criminal case against the appellants and as such the reliance on certain judgments by respondent No.3 is totally irrelevant.
Since the basic order was illegal and as such neither any recovery can be effected nor any case can be made against the appellants as held by the Hon'ble Supreme Court of Pakistan in case of Messrs Ibrahim Spinning Mills (1992 SCMR 1898).
(h) That respondent No.3 also misread the record and evidence so far as 1 lx containers were concerned. He has mentioned in Para-26 that these containers were rightly seized and confiscated as the same were available. It is pointed that the confiscation of these containers took place on 9- 12-2010 whereas the same were auctioned and disposed of during 2009. Hence the confiscation of these containers was also illegal as the goods which were not available cannot be confiscated. It is a condition precedent for confiscation of the goods that the same must be available and under the control of the Customs department.
(i) That respondent No.3 has also wrongly stated that the goods were mis-declared and got cleared fraudulently in violation of the relevant laws. It is submitted that no mis-declaration was made. The GD was filed under 2nd appraisemcnt and the goods were cleared after drawing representative samples subject to Lab test and as such the question of mis-declaration in such a situation does not arise. Respondent No.3 also failed to substantiate as to how the shipping company was at fault which provided containers. Thus there was no justification for imposition of penalty of Rs.25,000 on each container.
(j) (j) That respondent No.3 has wrongly mentioned in Para-8 that llx containers were containing HSD. It is an admitted fact that according to two consecutive reports received from Hydrocarbon Development Institute of Pakistan, 1 1 x containers were containing HSD containing water and sediment not usable in diesel engines and as such the same was rightly declared as residue of petroleum and no mis-declaration by the appellants.
(k) That respondent No.3 did not utter a single word in the impugned order so far as imposition of huge penalties upon the appellants and their clearing agents. He has neither maintained these penalties nor remitted the same nor mentioned anything in this behalf. This alone makes the impugned order illegal so far as it relates to imposition of penalties upon the appellants and their clearing agents.
(1) That appellants as earlier stated filed GD under 2nd appraisement. The goods examined by the Customs authorities. Representative samples were drawn and the clearance was made subject to Lab test and the appropriate procedure was that on receipt of report, the department should have charged duty and other taxes in accordance with the said report. There .Was no justification of imposition of huge penalty upon the appellants and their Customs House Agents which merit remittance keeping in view the facts and circumstances of the case.
(m) That under the directions of the Hon'ble Lahore High Court Multan Bench Multan contained in order dated 29-1-2010, the points mentioned in the Constitutional Petition were raised before respondent No.2 and she also reproduced the same in the earlier order-in-original at-page - 18 to 20 thereof but did not utter a single word to address the same in her order. The said points as reproduced in the earlier order-in-original at page-18 to 20 thereof by respondent No.2 were also raised before respondent No.3 but the same remained un-addressed. The points were:--
(a) An inquiry may be ordered to be conducted as to how the seized goods, if the same were diesel oil according to the version of the prosecution, were sold 0 Rs.26 per litter during the period when the rate of HSD was prevailing in the market exceeding Rs.60 per litter.
(b) As per order of the learned Special Judge (Customs, Anti-Smuggling and ,Taxation) Lahore dated 18-5-2009, respondents Nos.1 to 3 were allowed to join the auction if allowed under the Customs Act, 1969. Similarly as per judgment dated 315-2009 announced on 8-6-2009 by the Hon'ble Lahore High Court Lahore in Customs Appeal No.1 of 2009 it was directed that "learned court accepted the plea of respondent No. 3, qua the auction of the imported consignment and at its request allowed the applicant to participate in the auction.
(c) The seized goods were neither confiscated nor vested in the Federal Government and as. Such the same were required to be dealt with under section 201 of the Customs Act, 1969 according to which where any goods, other than confiscated goods, are to be sold under any provision of the Customs Act, 1969, they shall be sold after due notice to the owner but in this case no such notice was ever issued or served personally or through post upon respondents Nos.1 to 3.
(d) It is to be inquired as to why respondents Nos. 1 to 3 (now appellants) were not allowed to join the proceedings of the auction as per order of the learned trial court dated 18-5-2009 when it is specifically allowed by law and why the order of the Hon'ble Lahore High Court Lahore were violated.
(e) As per Report No. 15344 dated 3-4-2009 received from Hydrocarbon Development Institute of Pakistan (Petroleum Testing Centre) Multan/Lahore, the goods were found to be "test result of the sample is comparable to the HSD but contains water sediment and not suitable for use in diesel engine.
(f) The aforesaid report was ignored for the reason best known to the concerned authorities and a fresh Report No. IAC/09/04/ 2958 dated 25-4-2009 was obtained on the back of respondents Nos. 1 to 3 (now appellants) from H.E.J. Research Institute of Chemistry, University of Karachi and according to said report the goods were found as "in the light of the test carried out the given samples seem to be high speed diesel oil.
(g) Since the 2nd report also supported the opinion of Hydrocarbon Development Institute of Pakistan, the 2nd lab was forced and compelled by the prosecution and a clarification dated 16-5- 2009 (not report) was obtained according to which it was reported as "we re-analyzed your provided samples for the exact specification, results shows both samples of petroleum liquid fulfill the requirement of high speed diesel as per Pakistan standard specification of HSD.
The present case was built-up on the basis of clarification dated 16-5-2009 obtained under duress on the back of respondents Nos. 1 to 3 (now appellants). The samples stated to have been drawn and sent to HEJ Karachi were never obtained from the seized goods. There is nothing on record to establish that these samples were the representative samples of the consignment in question.
According to the information of respondents Nos.1 to 3 these samples were never drawn from the consignment Ili question and managed otherwise in order to get result of on choice by the prosecution due to mala fide on their part.
Besides above admittedly there are three reports. Two supported respondents Nos. 1 to 3 (now appellants) that the goods were freely importable being classifiable under HS-Code-2710.9100 while according to report of the other lab the goods were not importable, being classifiable under HS-Code-2710.1931. Justice demands that if there is difference in two reports submitted by two different institutions, the samples should have been sent to the third reputed lab for obtaining independent and impartial expert opinion but in this case report of the institution specifically notified by the Federal Government for testing of samples of the petroleum products was ignored being not liked by the prosecution and the case was built-up on the report obtained from non- notified lab and that too obtained under duress as is evident from the perusal of reports dated 25- 4-2009 and 16-5-2009. It is further pointed out that on receipt of report dated 25-4-2009 supporting the opinion of first report, the clarification was sought instead of sending the samples to some third independent and partial reputed lab. This speaks much about conduct of the prosecution in this case.
(n) That although respondents Nos. 2 and 3 had reproduced the application dated 8-2-2010 and order dated 29-1-2010 passed by the Lahore High Court Multan Bench Multan in their orders yet the issues were neither addressed nor disposed of which action on their part is patently void and illegal.
(o) That the aforesaid issues were crucial because if the goods were HSD, the same would have not been sold at Rs.26/litre during the period when the rate of HSD in the market was exceeding Rs.165/litre. This alone goes to the root of the case.
(P) That non application of judicial mind on the part of respondent No.3 he has maintained confiscation of 11 x containers without ascertaining as to whether the same were available or otherwise at the time of their confiscation by respondent No.2. It is humbly pointed out that the goods which are neither available nor existed cannot be confiscated out rightly under the law.
Respondent No.3 at the best would have raised the demand of short levy, if any, or as the case may be imposed penalty etc. But cannot maintain outright confiscation of 11 x containers which were not existed being auctioned long before.
(q) That the entire case was based on clarification sought by the department from HEJ Lab. It is pointed out that the first report from HDIP was in favour of the appellants while the 2nd clarification from HEJ was ambiguous as the said Lab stated the goods "seem HSD". Thus, the proprietary demands that the department should have sent the representative samples to some third Lab instead of seeking clarification of their on choice. This shows mala fide and arbitrariness on the part of the department.
(r) That respondent No.3 also lost sight that the appellants paid huge amount on account of duty and other taxes on 11 x containers but he did not utter a single word while maintaining out-right confiscation of these containers. This alone renders the impugned order nullity in the eyes of law.
(s) That a great injustice has been done with the appellants. Lawfully imported goods neither existed nor available were confiscated out rightly and that too without addressing to the factual and legal issues raised by the appellants. At the one hand the appellants have been penalized for allegedly importing HSD while on the other hand, the so-called HSD was sold at Rs.26/litre which could not be the price of HSD. Had the goods been HSD the same would have been sold at the rate of Rs.65/litre which was the rate prevailing in the market at the relevant time.
5. The respondents/department filed para-were comments which are as under:--
(a) That the goods imported by the complainant were found to be mis-declared and were liable to confiscation under the relevant provision of Customs Act, 1969. Samples drawn from the under reference Consignment were sent to HDIP, confirmed that the samples were found having properties comparable with diesel. On re-test, the same were found fulfilling the requirement of High Speed Diesel as per Pakistan Standard Specification of HSD attracting PCT heading 2710.1931.
In the instant case HSD has been correctly classified under heading 2710.1931 by application of General Rules for Interpretation to the Pakistan Customs Tariff. The presence of small quantity of water and sediments will not affect the classification of the impugned goods. By virtue of note 3 to Chapter 27 of the Pakistan Customs Tariff, the same cannot be termed as "waste oil" under PCT 27.10. Therefore, the goods were correctly seized and F.I.R. No.1 of 2009 dated 3-4-2009 was lodged against the importers, clearing agents and others.
With reference to the seizure of already cleared 14 containers by the seizing officer vide AIR No.9 of 2009 dated 3-4-2009, the following submissions remove any doubt on the legality of the Collectorate's action:
(i) In terms of section 168(1) of the Customs Act, 1969. The' appropriate officer of customs is empowered to seize the goods liable to confiscation: relevant extract is reproduced as under:-- Section 168(1): .---"The appropriate officer may seize any goods liable to confiscation under this Act, and where it is not practicable to seize any such goods, he may serve on the owner of the goods or any persons holding them in his possession or charge an order that he shall not remove, part-with or otherwise deal with the goods except with the previous permission of such officer."
From a bare perusal of the aforesaid provisions of section 168(1) of the Customs Act, 1969, it is evident that an Officer of Customs is fully empowered to (a) seize any goods liable to confiscation under the Act or to serve an order on the owner or the person holding them in his possession or charge that he shall not remove, part with or deal with the goods except with the previous permission of the officer; (b) keep the seized goods and deal with them in accordance with the provisions of the Customs Act, 1969. In this case the complainants were directed not to remove or deal with the goods which were in their custody except the prior permission of the Authorized Customs Officer.
(ii) Needless to mention that the controversy regarding seizure of goods not in physical possession of the appropriate, officer of Customs is legally strengthened on the basis of section 2(rr) of the Customs Act, 1969 wherein the word "Seize" is defined is as under:- "Seizure" means to take into custody, physical or otherwise, goods in respect of which some offence has been committed or is believed to have been committed under this Act or the rules: and all cognate words and expression shall be construed accordingly"
The above cited submissions adequately and unambiguously affirm that for seizure, physical custody is not mandatory.
(Shahid Mahmood Bhatti, Member (Judicial))
Therefore the sine qua non for the seizure is goods that were liable to confiscation and as the impugned goods in custody of the complainant and it was not possible to take physical custody, therefore, the same were seized whilst under the custody of the importer (complainant) as clearly provided for under section 168(1) read with Section 2(rr) of the Customs Act, 1969. As clarified above the owner of the goods who was in possession of the 14 containers was served with the notice that he shall not deal with the goods except with the prior permission of the authorized Customs Officer of MCC, Multan.
(b) The Order-in-Original is lawful. The points raised by the appellants have been discussed in the Order-in-Appeal.
(c) The lab test report of HDIP on which the appellants are repeatedly relying, at every forum is also not explanatory in its nomenclature. It is not out of place to mention here that test reports of HDIP Laboratories, had become seriously doubtful in view of their ambiguous results and un-clear explanations regarding petroleum product. In this regard, the Ministry of Petroleum and Natural Resourcs, Government of the Pakistan vide its Letter No. 10(1) of 2008 dated 11-5-2009 had authorized H.E.J. Lab for conducting test of petroleum products. Moreover, Industrial Analytical Center at H.E.J. Research Institute of Chemistry, Karachi is the most modern, equipped and having state of the art testing facilities and apparatus. Further this issue has been categorically thrashed out and decided on merit by His Lordship Mr. Justice Syed Hamid Ali Shah, Judge Lahore High Court Multan Bench, Multan in para 3 of his judgment dated 8-6-2009 given in the Customs Criminal Appeal No.01 of 2009 titled Yasir Enterprises v. Model Customs Collectorate Multan filed by the appellant (Annexed as "H"). His Lordship has observed that:-- "The laboratory reports have remarked that consignment contains water and sediments but the relevant test to ascertain the percentage of water and sediments is ASDM-D473, this test was not carried out by HDIP laboratories, therefore, the remarks do not carry any weight and cannot be considered as authentic. The Karachi Lab has thus correctly remarked that consignment under reference is HSD Oil."
(d & e) Incorrect, baseless and contrary to the facts of the case and is not admitted. However, for the sake of clarification it is added that test reports of HDIP Laboratories, had become seriously doubtful in view of their ambiguous results and unclear explanations regarding petroleum product due to the connivance of Dr. S.S. Naqvi, Chief Chemist, HDIP. In this regard, on receipt of complaint from Federal Board of Revenue, Islamabad necessary disciplinary proceedings were initiated by the Ministry of P&NR against Dr. S.S. Naqvi, Major penalty of compulsory retirement was awarded to Dr. S.S. Naqvi for providing wrong pen picture in test reports of residue of petroleum. It is further informed that the Ministry of Petroleum and Natural Resources, Government of Pakistan vide its Letter No. 10 of 2008 dated 11-5-2009, had authorized the Industrial and Analytical Center of H.E.J.
Research Institute of Chemistry, Karachi for conducting test of petroleum products. Moreover, Industrial Analytical Center at H.E.J. Research Institute of Chemistry, Karachi is the most modern, well equipped and having state of the art testing Laboratory, in Pakistan. It is also pertinent to point out that it is not binding on the Customs Authorities to get the samples tested from HDIP Laboratories under any provision of Customs Act, 1969. Rather Ministry of Petroleum and Natural Resources, Islamabad which is responsible for regulating the business of POL products in the country had it self authorized Customs Authorities to seek expert opinion from H.E.J. Research Institute Karachi (Annexed as "I"). Further this issue has been categorically thrashed out and decided on merit by His Lordship Mr. Justice Syed Hamid Ali Shah, Judge Lahore High Court Multan Bench Multan in para 3 of his judgment dated 8-6-2009 titled as Yasir Enterprises v. Model Customs Collectorate Multan (already incorporated at para "c").
(f) That the complainant's contentions are incorrect, baseless and contrary to. The facts and record of the case. The goods were lawfully disposed of under the provision of Customs Act, 1969 and as per instructions of the FBR, Islamabad regarding disposal of such goods. No statutory provisions of law have been violated. The goods were admittedly High Speed Diesel Oil as confirmed by test report and fact that CSD, issued receipts confirming purchase of HSD from the department. The said oil was disposed of @ Rs.300 per litre to Canteen Stores Department (CSD). It is worth mentioning that High Speed Diesel oil cannot be disposed of through Public Auction being a restricted item under the Import Policy in force. At the time of disposal, confiscated HSD was also being disposed of @ Rs.30 per litre, by the Collectorate of Customs Quetta to CSD. Pakistan State Oil, Canteen Stores Department (CSD) and other oil marketing companies were also asked to offer prices for disposal of the diesel. However, only CSD & Askar Oil made offers for the confiscated HSD.
The offer of CSD was accepted and thereafter, CSD while taking delivery certified that they had lifted HSD from the Dryport. In view of the above submissions, version of the department that the goods were in fact HSD Oil is quite obvious. If for the sake of discussion, the goods would have been residue or waste oil as declared by the complainant then Canteen Stores Department (CSD) would have not taken the delivery of the said goods @ Rs.30 per litre. Further the CSD after its purchase did not lodge any complaint that the purchased oil was not HSD Oil.
(g) Incorrect, baseless and contrary to the facts of the case and vehemently denied. Since it is a case of fiscal fraud and the goods were imported in violation of the provision of the Customs Act, 1969 and Import Policy Order (in force), the national exchequer were also deprived of its legitimate revenue, hence the confiscation of the goods and orders for recovery of Government revenue are legal in the eyes of law even the orderin-original passed by the Adjudicating Officer was barred by time.
(h) The facts narrated by the appellants in this para are misleading. These containers were seized on 3-4-2009. The goods of these containers were subsequently disposed of in terms of subsection
(4) of section 169 of the Customs Act, 1969. Therefore, confiscation of above containers is not violation of the provision of the Customs Act, 1969.
(i) It is stated that the conclusion drawn by the Collector Appeals is correct and lawful. From the above paras it is crystal clear that there was a gross mis-declaration of description of quantity to evade duty and taxes and violate the provisions of Import Policy Order.
(j) Incorrect, baseless and contrary to the facts of the case and vehemently denied. However it is added that the goods imported by the complainant were found to be mis-declared and were liable to confiscation under the relevant provisions of Customs Act, 1969. Samples to from the under reference consignment were sent to HDIP, revealed that the samples, on re-test were found fulfilling the requirement of High Speed Diesel as per Pakistan standard specification of HSD attracting PCT Heading 2710.1931 (import of which is restricted into Pakistan under section 16 of the Customs Act, 1969 read with Serial No.2 of Past II Appendix-B of Import Police Order 2008-2009. And is liable to be confiscated under section 168 of the Customs Act, 1969 if imported by any other person other than oil marketing companies. In the instant case HSD has been correctly classified under heading 2710.1931 by application of General Rules for Interpretation to the Pakistan Customs Tariff. The presence of small quantity of water and sediments will not affect the classification of the impugned goods. By virtue of note 3 to Chapter 27 of the Pakistan Customs Tariff, the same cannot be termed as "waste oil" under PCT 27.10.
(k) The order of the Collector (Appeals) is correct and lawful. The order-in-original has been upheld by the Collector Appeals with some exceptions. Hence penalties imposed in the Order- inOriginal hold the field.
(1) Incorrect, baseless and contrary to the facts of the case and vehemently denied, comprehensively discussed in the preceding .Para No.(j).
(m) Denied. The contention of he appellants is not 'correct and against the facts. The Collector Appeals orders are speaking orders. All the points raised by the appellants have been discussed in the Order-in-Appeal.
(n) All the points raised by the appellants have been discussed in the order-in-appeal. Hence, contention of the appellants is not correct.
(o) The goods were admittedly HSD as discussed in above paras and were sold to CSD at the rate of Rs.30 per, liter. As discussed in para "6" this sale was in accordance to the prevailing price of HSD on which it was being disposed of. The process of disposal also confirms the description of goods HSD.
Incorrect, baseless and contrary to the facts of the case and vehemently denied, further it is added that with reference to the seizure 'of already cleared 14 containers by the seizing officer AIR No.9 of 2009 dated 3-4-2009, the following submission remove any doubt on the legality of the Collectorate's action:--
(i) In terms of sections 168(1) of the Customs Act, 1969. The appropriate officer of customs is empowered to seize the goods liable to confiscation; relevant extract is reproduced as under:-- Section 168(1):.--- "The appropriate officer may seize any goods liable to confiscation under this Act, and where it is not practicable to seize any such goods, he may serve on the owner of the goods or any persons holding them in his possession or charge an order that he shall not remove, part-with or otherwise deal with the goods except with the previous permission of such officer."
From a bare perusal of the aforesaid provisions of section 168(1) of the Customs Act, 1969, it is evident that an Officer of Customs is fully empowered to (a) seize any goods liable to confiscation under the Act or to serve an order on the owner or the person holding them in his possession or charge that he shall not remove, part with or deal with the goods except with the previous permission of the officer; (b) keep the seized goods and deal with them in accordance with the provisions of the Customs Act, 1969.
(ii) Needless to mention that the controversy regarding seizure of goods not in physical possession of the appropriate officer of customs is legally strengthened on the basis of section 2(rr) of the Customs Act, 1969 wherein the word "Seize" is defined is as under:-- "Seizure" means to take into custody, physical or otherwise, goods in respect of which some offence has been committed or is believed to have been committed under this Act or the rules: and all cognate words and expression shall be construed accordingly".
The above cited submissions adequately and unambiguously affirm that for seizure, physical custody is not mandatory. Therefore the sine qua non for the seizure is goods that were liable to confiscation and as the impugned goods in custody of the complainant and it was not possible to take physical custody, therefore, the same were seized whilst under the custody of the importer (complainant) as clearly provided for under section 168(1) read with section 2(rr) of the Customs Act, 1969. As clarified above the owner of the goods who was in possession of the 14 containers was served with the notice that he shall not deal with the goods except with prior permission of the authorized Customs Officer of MCC, Multan (already Annexed as "G"). It is therefore, prayed that the under reference Order in-Appeal may kindly be modified to the extent that the seizure of already cleared part landed 14 containers of the same consignment be declared legal action by the Department.
(q) Incorrect, baseless and contrary to the facts of the case and vehemently denied. It is not out of place to mention here that the report of H.E.J. Has categorically confirmed that the samples are found fulfilling the requirement of High Speed Diesel as per Pakistan Standard specification of HSD.
(r) That HSD Oil was imported in violation of the provisions of Customs Act, 1969 and Import Policy Order (in force) and the same was legally ordered to be confiscated outright by the Adjudicating Authority as well as by the Collector, Customs (Appeal), Lahore.
(s) Incorrect, baseless and contrary to the facts of the case and vehemently denied. While the said point primarily relates to the Adjudicating Authority, it is added that the complainant's contention are incorrect, baseless and contrary to the facts and record of the case. It is observed that the goods were lawfully disposed of under the provision of Customs Act, 1969 and as per instructions of the FBR, Islamabad regarding disposal of such goods. No statutory provisions of law have been violated. The goods were admittedly High Speed Diesel Oil as confirmed by test reports and fact that CSD issued receipts confirming purchase of HSD from the department. The said oil was disposed of @ Rs.30 per litre to Canteen Stores Department (CSD). It is worth mentioning that High Speed Diesel oil cannot be disposed of through Public Auction being a restricted item under the Import Policy in force. At the time of disposal, confiscated HSD was also being disposed of @ Rs.30 per litre, by the Collectorate of Customs Quetta to CSD, Pakistan State Oil, Canteen Stores Department (CSD). The oil marketing companies were also asked to offer prices for disposal of the diesel. However, only CSD & Askar Oil made offers for the confiscated HSD. The offer of CSD was accepted and thereafter, CSD while taking delivery certified that they had lifted HSD from the Dryport. In view of the above submissions, version of the department that the goods were in fact HSD Oil is quite obvious. If for the sake of discussion, the goods would have been residue or waste oil as declared by the complainant then Canteen Stores Department (CSD) would have not taken the delivery of the said goods @ Rs.30 per litre. Further the CSD after its purchase did not lodge any complaint that the purchased oil was not HSD Oil.
6. Arguments were heard. The learned counsel for the appellants at the outset contended that Order-in-Original No. 43 of 2011 dated 4-4-2011 issued on 19-4-2011 is continuation of an earlier Order-in- Original No.150 of 2010 dated 24-1-2010 issued on 9-12-2010 by respondent No.2 on the basis of show cause notice dated 27-5-2009 the learned adjudicating officer, respondent No.2 was required to finalize adjudication proceedings and pass the order within 120 days to be reckoned from the date on which the show cause notice was issued. If the time for which an extension of 60 days could have been granted by the learned Collector and the time of 30 days on account of adjournments sought by the parties are also included in the initial period, the order was to be passed within 210 days i.e. On or before 23-12-2009 in terms of section 179(3) of the Customs Act, 1969, whereas in this case the earlier order was passed on 9-12-2010 i.e. After lapse of 561 days.
Similarly, the second order dated 19-4-2011 was passed by the learned adjudicating officer, respondent No.2 after expiry of 691 days from the date of issuance of show-cause notice. The learned counsel for the appellant vehemently contended that no extension was granted in this case by the learned Collector which further extended the aforesaid period by 60 days. He further contended that the aforesaid facts otherwise stood established and admitted by virtue of order dated 27-1-2011 passed in term of section 195 of the Customs Act, 1969 by the learned Collector of Customs, MCC, Lahore. He further contended that by re-opening any matter, the limitation would neither be waived nor extended. The limitation as specified under section 179(3) ibid shall be counted from the date of issuance of show cause notice irrespective of the fact whether the adjudication is conducted on re-opening or on remanding any case as held in case of "Messrs Super Asia Muhammad Din and Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala and another"
2009 PTD 60. In the said case the notices were issued for re-adjudication of the case after its remand by the Hon'ble Lahore High Court, Lahore. Since, the notices were issued after expiry of the limitation as specified under section 36(3) of the Sales Tax Act, 1990, thus, it was held that as the show-cause notice was re-activated on remand of case, thus, the date for calculation of time period shall be reckoned from the date on which the show cause notice was issued and the matters were quashed. The learned counsel for the appellants further relied upon the judgment of this Tribunal passed in case "Irshad Ahmad and another v. Faiz Muhammad Chaudhry, Deputy Superintendent, Customs (AIB), Lahore and 6 others" (2012 PTD (Trib.) 47). According to the learned counsel for the appellants the Order-inOriginal No.43 of 2011 dated 19-4-2011 was passed by the learned adjudicating officer, respondent No.2 on the basis of show-cause notice dated 27-5-2009 after expiry of 691 days instead of limitation prescribed under section 179(3) of the Customs Act, 1969, thus, barred by limitation and nullity in the eyes of law. He further argued that the GD was filed under 2nd appraisement system and the clearance was subject to Lab Test for which representative samples were drawn and sent to HDIP. According to report received from HDIP, the goods were comparable to HSD, but containing water and sediment not suitable for use in diesel engine. According to the learned counsel for the appellants even the report sought from HEJ. Lab, the goods were reported "seem to be HSD". The learned counsel for the appellants agitated that the clarification subsequently sought. From HEJ had no evidentiary value. Moreover, the clarification was contradictory to the report dated 27-5-2009 according to which the petroleum liquid was containing water by crackle and ash. The learned counsel for the appellants contended that had there been any reservation with the department in respect of description, the representative samples should have been again drawn and sent to third reputed Lab. However, according to him even the report of HEJ Lab had supported the description of the goods as residue of petroleum appropriately classifiable under PCT Heading 2713.9090 importable by the commercial importer under prevalent Import Policy Order. The learned counsel further contended that his aforesaid contention also gets support from the fact that 11 containers seized by the department were subsequently sold in auction and the highest bid at which the same were sold was Rs.30 per litre including the pallets and empty drums and if the value of packing material is excluded the sale price would come to Rs.26 per .Litre, whereas during the said period HSD was being sold in the open market @ Rs.61 per litre. The learned counsel for the appellant stated that it was the reason that the appellants were never associated in the auction proceedings despite the direction of the learned Special Judge as well as the Hon'ble Lahore High Court, Lahore. According to him despite repeated requests made by the appellants and the direction of Hon'ble Lahore High Court, Multan Bench Multan vide order dated 29-1-2010, the aforesaid aspect that if the material was HSD then how it was sold @ Rs.26 per litre was never inquired into or investigated by the department. He further contended that since the GD was filed under 2nd appraisement system, thus, it was obligatory upon the department that on receipt of report from HDIP, the goods should have been assessed and cleared in the light thereof and there was no reason of making seizure of 11 containers nor there was any justification of institution of a criminal case against the appellants and others. He also argued that appropriate and notified Lab for test of petroleum product was HDIP and not HEJ Lab and in the presence of report from HDIP, the opinion of HEJ Lab has lost its relevance. He further contended that out right confiscation of 11 containers long after their disposal in auction was also illegal because condition precedent for confiscation of the goods is that the same shall be available. He further contended that no mis-declaration of any sort was made. Correct and true description of the goods was declared while filing GD under 2nd appraisement system and the clearance was subject to Lab Test for which representative samples were drawn. According to the learned counsel for the appellant that in the given circumstances, the question of alleging mis - declaration in a case where the GD was filed under 2nd appraisement does not arise. He vehemently rebutted the contention of the department as mentioned in the para-were comments that the goods were HSD. According to report of HDIP the same were comparable to HSD while according to HEJ the same "seem" to be HSD. As regards - the reply of the department that the goods were rightly classified under PCT Heading 2710.1931, the learned counsel for the appellants contended that the matter was never sent to Classification Center headed by learned Additional Collector established in Customs House, Karachi nor any report from the said Center was obtained.
The letter dated 11-5-2009 addressed to the learned Collector of Customs, MCC, Karachi was containing the opinion of the learned Collector of Customs Multan. In the said letter it was specifically mentioned that the goods were classifiable under PCT Heading 2710.1931 and that a case had been registered by the department. In response thereto it was intimated by the learned Collector of Customs Karachi that "the classification under PCT Heading 2710.1931 as suggested in your aforesaid letter is, therefore, concurred". The aforesaid reply itself shows that the same was maneuvered having no validity in the eyes of law. Had there been any doubt with regard to the classification of the goods, the matter should have been referred to the Classification Center, which exercise was never undertaken in this case. The learned counsel for the appellants further rebutted the contention of the department that the goods once assessed, cleared and out of charged cannot be seized in terms of section 168(1) of the Customs Act, 1969. According to him, no seizure can be made nor any direction can be given to the owner of the goods not to remove, part with or deal with such goods unless and until the same are available. The availability of the goods is condition precedent for making seizure thereof. The learned counsel for the appellants further contended that so far as the seizure and confiscation of 14 containers were concerned, the issue was settled by the Appellate Authority vide impugned order which was never assailed by the department before any higher forum. Hence, the reply given by the department with regard to the said containers is totally irrelevant and uncalled for. The learned counsel for the appellants vehemently rebutted the contention of the department that the issue with regard to the description of the goods was resolved by the Hon'ble Lahore High Court. Had the issue of description been resolved by the Hon'ble Lahore High Court then there would have been no reasons for His Lordship to direct drawal of fresh samples as mentioned in Para-10 of the judgment dated 8-6-2009.
Moreover, the appeal was filed against the order of the learned Special Judge allowing disposal of the goo& and not for seeking any declaration with regard to the description thereof. The learned counsel for the appellants further rebutted the reply of the department that the Chief Chemist, HDIP was in connivance with the importer and that the said Lab had become doubtful on the ground that present case was the only case in which 2nd report was obtained from HEJ Lab, whereas prior and after the present case the reports were being obtained from HDIP by the Collectorate of Customs Multan and other Collectorates. This alone is suffice to negate the reply filed by the department. The learned counsel for the appellants also refuted the contention of the department as contained in the Para-were comments that even if the original order was barred by limitation, recovery of escaped amount of taxes can be recovered by relying upon the ratio settled by the Hon'ble Supreme Court of Pakistan in case of "Messrs Ibrahim Spinning Mills" (1992 SCMR 1898). It was held by their Lordships in the said case that no recovery of any escaped amount can be affected after expiry of limitation prescribed under the law. He further contended that the reply filed by the department is even otherwise misconceived because at the one hand the order of the learned Collector of Customs (Appeals) has been stated to be correct and lawful while at the same time the seizure vacated by him is being objected. According to him the department has tried to confuse the issue by stating that for seizure, physical custody is not mandatory but lost sight that availability of the goods is mandatory for making seizure thereof with or without custody.
The learned counsel further argued that the goods imported by the appellants were residue of petroleum and by importing the same the appellants had neither violated any provision of the Customs Act, 1969 or Import Policy Order. According to the learned counsel for the appellants the entire case was made due to mala fide and ulterior motive on the part of the department. The learned counsel, thus, prayed that the impugned order along with original order be set aside.
7. On the other hand the learned Departmental Representative while rebutting the arguments of the learned counsel for the appellants stated that it was the discretion of the learned Collector to decide the case himself or remand the same to any other forum on its re-opening. He further stated that limitation prescribed under section 179(3) of the Customs Act, 1969 is of directory and not mandatory in nature. He further stated that the appellants had availed remedy before different forums where the issue of limitation was not raised. According to him, the adjudication proceeding under section 179 and criminal proceedings under section 161 of the Customs Act, 1969 are independent of each other and both proceedings can go side by side as law does not bar initiation of criminal proceedings before culmination of the adjudication. According to him, the criminal proceedings were initiated against all concerned persons without any discrimination. According to him the second appraisement in respect of goods in question was not warranted. He further stated that report of HDIP was not relied upon as the Chief Chemist was in connivance with the importer and as such the samples #TBS PT1) #TBE were sent to HEJ Lab Karachi. He further stated that according to clarification sought from HEJ Lab, the goods were mis-declared on both accounts i.e. Description and quantity. According to him the goods should have been classified under PCT Heading 2710.1931 as availability of small amount of water and sediment shall not affect the classification of the goods and that the same cannot be termed as waste oil falling under PCT Heading 27.10. He further stated that the import of HSD is allowed only to Oil Marketing Companies. He further stated that the classification was confirmed by the learned Collector of Customs Karachi. He further argued that the appellants being commercial importers were not permitted to import the goods in question. He further stated that the goods were disposed of @ Rs.30 per litre. The learned Departmental Representative prayed for dismissal of the appeal filed by the appellants.
8. We have heard the arguments advanced by the rival parties and perused the case record carefully. The learned counsel for the appellants at the very outset assailed the impugned as well as original order on the ground that the case was decided after expiry of limitation as specified in section 179(3) of the Customs Act, 1969. A perusal of the record reveals that the show cause notice in this case was issued on 27-5-2009 and the order-in-original was issued on 19-4-2011. As such the order-in-original is admittedly time barred by (691) days even if (30) days time on account of adjournments sought by the appellants and (60) days time prescribed for extension, though not sought in this case, is included. The contention of the learned Departmental Representative that on re-opening the case by the learned Collector of Customs, limitation shall be reckoned from the date. On which the re-opening order was passed, is not tenable because on re-opening the case, show cause notice dated 27-5-2009 again stood re-activated and the limitation prescribed under Section 179(3) shall be counted from the date of issuance of show cause notice as held in case "Messrs Super Asia Muhammad Din and Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala" 2008 PTD 60. As regards the arguments of learned Departmental Representative that the time period specified under section 179(3) of the Customs Act, 1969 is administrative and directory in nature, we are not persuaded to agree with him because where any liability is created, the limitation would be mandatory in nature. This Bench in an earlier case "Irshad Ahmad and another v. Faiz Ahmad Ch., Deputy Superintendent Customs (AIB) Lahore and 6 others" (2012 PTD (Trib.) 147) has already dealt with the issue of limitation specified in section 179(3) of the Customs Act, 1969 and its nature as to whether it is directory or mandatory and as such to understand rationale of the findings in the said case, it would be appropriate to reproduce the relevant paras of the said judgment:-
(6) As regards Issue No.(i) of Para 5, the order-in-original was issued under section 179(3) of the Customs Act, 1969 being time-barred as not issued within the prescribed time limit of (120) days or extended period of (60) days, it is observed that the show-cause notice in this case was issued on 30-9-2008 and the order-in-original was issued on 5-5-2010. As such the orderin-original is admittedly time-barred by 112 days. Even if the adjournments sought by the appellants which is approximately (30) days and the stay given by the Court which is approximately (260) is excluded then, too, the order-in-original is time-barred by (112) days. The issue of time bar has time and again being discussed in a number of judgments delivered by the superior judicial for a and the provisions relating thereto are mandatory in nature for implementation by all subordinate judicial and quasi-judicial forum in view of the Doctrine. Of Binding Precedents and Stare Dicisis. In this connection the department has vehemently contested that time period prescribed under the statute namely, section 179(3) of the Customs Act, 1969 is administrative and directory in nature and not mandatory, hence does no effect proceedings, if any, concluded after expiry of time limit. It further says that there is nothing in section 179(3) Qt. The Customs Act, 1969 nor in any provision of Act that specifies the section for the nullification of the order to the adjudicating officer for non- compliance of the time limit. In this regards, the department has referred to the Article 254 of the Constitution of Islamic Republic of Pakistan and the judgment of the Supreme Court of Pakistan reported as 1993 SCMR 311. The Article 254 of the Constitution is general in nature and does not specify of rebut statutory provisions contained in special/specific Acts. Otherwise there is no requirement for legislative to prescribe different limitation periods for different statutes.
Redundancy cannot be attributed to these statutory prescribed time limits.
(7) The judgment of the Hon'ble Supreme Court of Pakistan referred to by the respondent is in respect of issuance of a notice to the incumbent under section 171 of the Customs Act, 1969 to apprise him of the grounds of any action either of seizure or detention of goods and is deemed to be completed if the incumbent is otherwise informed of the grounds either through issuance of a notice under section26 of the Customs Act, 1969. This notice under section 171 even otherwise does not specify any time limit. This contention of the department that the prescribed limitation is merely directory is not tenable in view of the following judgments of the Hon'ble Lahore High Court, Lahore in the case of Super Asia Muhammad Din and Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala and others reported as 2008 PTD 60.
"The claim of the Revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance, Act, 2003 is merely directory cannot be accepted. It is settled law that where in action on the part of public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the Revenue in that regard will make a provision of law redundant and nugatory.
Redundancy or superfluity of an act of parliament and a provision of law cannot be readily accepted. All the more so restricts the executive power to touch the pocket of the taxpayer thereby creating a threat after its expiry even if there was good case for creation of liability he'will not be dragged in."
(8) The above contention of the Revenue is also negated by the ratio decidendi settled by the Hon'ble Supreme Court of Pakistan in Nigina Silk Mills Lyalpur v. The. Income Tax Officer and the Appellate Tribunal, Pakistan reported as PLD 1963 SC 322. ......................... In so many words referred to legal position that once limitation has started to run and had come to end the assessee has required vested rights of escapement of assessment by lapse of time."
(9) The Hon'ble Supreme Court of Pakistan in the above referred two, judgments observed as under:- "The Court must lean against giving a statute retrospective operation on the presumption that the legislature does not intend what is unjust. It is chiefly where the enhancement would prejudicially affect vested rights, are the legality past transactions or impair existing contracts, that the rule in question prevails reference may be made in this connection to page 206 of Maxwell on the Interpretation of Statute, 11th Addition. Even if two interpretations are equally possible, the one that saves vested rights would be adopted in the interest of justice especially where we are dealing with a taxing statute. The appellant herein had already acquired the vested rights of escaping assessm ent by lapse of time, when the 1960 Ordinance was enforced. In all probability, the legislature never intended that the period of limitation prescribed in the Act should become variable with the charges in the "financial year" or "year" inserted in the Act for certain other purposes, namely to accord with the new accounting years adopted by Government."
(10) In the case of Pace International Rawalpindi v. Secretary Revenue Division, Islamabad, the Federal Tax Ombudsman (FTO) while their judgment reported as 2006 PTD 340 has observed that the assessm ent of sales tax of a person in default was to be made within 45 days of the issuance of show-cause notice and passing of order-in-original beyond that period is time-barred. This position was reinforced in their judgment of SS Oil Mills Ltd. v. Secretary Revenue Division, Lahore reported as GST 2005 CL 592 regarding the orders issued beyond statutory limitation period. The judgment of the Federal Tax Ombudsman (FTO) in the case of Pace International Rawalpindi by the President in their order reported as PTCL 2005 CL 841 states that the time limit prescribed under section 36(3) is mandatory because a public functionary is empowered to create a liability against a citizen.
(11) The same viewpoint has been taken by the Hon'ble Supreme Court of Pakistan in their judgment reported as 1992 SCMR 1898. It in so many words states that while construing the financial statues, its terms are strictly to be followed:- " ........................ Thirdly, while considering a financial statue, its terms are strictly to be followed. Keeping in view these principles, for short levied duties on account of "inadvertence, error or misconstruction", section 32(3) of the Customs Act, 1969 provides that for recovery notice shall be served 'within six month'. If that is not done, like a suit for recovery of money after lapse of time prescribed by law of limitation, the recovery becomes unenforceable. Therefore, the provision is not merely directory as concluded by the learned Deputy Attorney General...... (12) The Central Board of Revenue has also clarified this issue vide its Letter No.5(4)/CEJ/2000 dated 23-12-2000 that the provisions relating to time period within which the order-inoriginal is to be passed are mandatory. The relevant part of C.B.R's. Aforesaid letter reads as under:-- "It has been observed with concern in the Board that at present a huge number of cases as reported.By the Collector (Adjudication) are pending adjudication. Collector (Adjudication) are aware that provisions relating to adjudication of cases in the Customs, Sales Tax and Central Excise Law which bind the adjudicating authorities to decide the cases within 45 days of the issuance of the show cause notice or within such extended period, for which reasons shall be recorded in writing and that such extended period shall in no case exceed. 90 days in all. The Member (Central Excise) while expressing concern over the huge back log has directed that all out efforts be made to ensure due compliance of the aforesaid mandatory provisions of the law and decide the pending cases within the prescribed time limit of 45 days to avoid any legal complications."
(13) The above view that once limitation period expires the order or assessment becomes time- barred is also supported by various judgments of the superior judicial for a reported as 2009 SCMR 1126, 2002 MLD 180, 2003 PTD 1354, 2003 PTD 1797, 2008 PTD 578, 2009 PTD 762, 2009 PTD (Trib.) 107, (2010) 109 Taxation 221. Hence issue No.(i) is therefore, answered in the affirmative.
9. In view of the foregoing, the adjudication proceedings as well as the superstructure built thereon is infested with legal infirmities and patent violation of mandatory provisions contained in section 179(3) of the Customs Act, 1969 which makes the subsequent proceedings ab initio null and void.
Although the other issues raised by the learned counsel appearing on behalf of the appellants on merits of the case are carrying some weight yet we do not feel the necessity of dilating there-upon as the order-in-original was not issued within prescribed time limit as specified in the statute and the appeals are being disposed of purely on legal ground. Consequently, impugned order-in- appeal as well as order-inoriginal are set aside. .